In the wake of late-February’s budget announcement by CPAM, and in anticipation of the upcoming RCM Budget Model Town Hall, WLUFA is distributing a summary of our findings this year as we took a closer look at University Finances (see below). Thanks are due to Sue Ferguson for writing the following piece, to Jim Gerlach for providing graphs, and to those people who offered their services by filtering through and summarizing the financial documents.

In addition, we’re attaching Ken Snowdon’s recent CAUBO (Canadian Association of University Business Officers) Report, which also clearly shows that the lion’s share of university spending since 2001 has been dedicated to buildings and interest payments.

Sincerely,

Michele Kramer,

WLUFA President

The song (and dance) continues . . .

Costs continue to escalate, funding levels remain flat, and the intense competition for post-secondary students persists. In short, expenses continue to rise faster than revenues and we continue to have a structural deficit. – CPAM statement emailed to faculty on Feb. 23, 2016

Where have we heard this tune before? Oh yes, last year, and the year before that, and, well, enough times that it now qualifies as an “earworm”—a tune that comes unbidden into your mind, and gets stuck there. And you know how that sort of thing can drive you crazy.

But instead of going off the deep end, WLUFA Members, reasonably enough, decided last year to request the Administration provide further clarification of the University’s financial situation. Although we understood that budgets are really about setting out the priorities of the Administration, concerns ran deep that recent budgets (and the structural deficits they forecast) did not reasonably reflect the actual financial situation. That is, Laurier’s audited financial statements (which the University is legally required to file with the government every year), showed a far rosier picture than the doom and gloom scenarios painted in the budget. Those statements also raised questions about whether revenue from tuition which should pay for the operating costs of the University was in fact being diverted to pay for capital costs. If so, then the squeeze on our classrooms, hiring, and educational support was a result not of enrolment problems or low government funding (although we don’t deny these are issues that need attending to), but of an Administration that is choosing to put buildings ahead of education. Members were keen to find out both the facts and the rationales. And so far, the University had not been forthcoming on either front.

So, WLUFA has dug a little deeper into the facts in order to discern which financial questions remain unanswered, given the information that is openly available to investigate. We asked colleagues who were not involved in the initial assessments that led to WLUFA raising these questions in the first place to do a detailed historical analysis of the budgets and financial statements. The Administration provided the committee with the following additional documents:
· Operating Fund Budget to Actual Report with Appropriations -10 years
· Ancillary Fund Budget to Actual Report with Appropriations-10 years
· Real Estate Report with Appropriations -3 years (this fund was created late in fiscal 2011/12)
· Audited Financial Statements – Statement of Operations -10 years
· Reconciliation of Budget to Actual Reports with Audited Financial Statements -10 years

A final report is still being prepared but preliminary conclusions confirm WLUFA’s initial concerns.
· First, the records show a clear pattern of the Administration predicting a huge operating deficit in the budget but then having an actual surplus at the end of the year (See Table below). In most years, the differences between the forecast loss and the actual surplus are huge, in the order of $10 million a year. The budgets are inaccurate and appear to be used for political purposes to paint a doom and gloom scenario to extract concessions.
· Second, there is ample evidence that operating budgets have been used to pay for what would normally be considered to be capital items: (i) amortization (that is, spreading the cost of an asset or debt over time) of capital assets exceeds revenue amortization of donations for capital assets, meaning that the capital asset was not initially fully funded by capital providers and some came from operating funds (i.e., tuition and government grant revenue); (ii) debt repayments are being put through operating budgets (iii) rent may be being charged in the budget for the use of facilities.

Graph: Comparison of Budget to Actual, 2006-2015

The more in-depth analysis, in other words, affirms precisely what our preliminary reports (which were based on less data, and conducted by a single Member) suggested: despite its song and dance insisting that the University is in dire financial condition, that simply isn’t the case. Cuts to salaries or education are simply not justified. WLUFA is now devising a series of questions about the University’s priorities intended to move the discussion forward. Members will get a chance to discuss those questions at the upcoming General Membership Meeting in April —and see if we can’t change the tune.